Obtaining the resource and budget that is required to train and educate staff on their financial crime management responsibility is sometimes challenging, because how do you measure the return on investment if this investment is designed to deter illicit activity ever happening? Here is a very timely and simple story that might just help!

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For more than four years I’ve had the pleasure of working in support of international regulated businesses to train and educate all levels of staffing, from the shop floor through to the boardroom, and I consider this to be one of the most privileged and rewarding roles that I have held.

As a former MLRO I’m acutely aware that this training comes at a cost, and that often the greatest difficulty and challenge is trying to articulate what the return on this investment will be to the senior management of a bank who have several competing demands on limited resources.

This is not an unusual challenge it appears and has been recognised in an earlier thematic report provided by the Financial Conduct Authority (FCA) ‘How Small Firms Manage Money Laundering and Sanctions’ (TR14/16, November 2014) [1]. In this report the FCA noted that 33% of firms visited were considered to have insufficient compliance resources, and in multiple enforcement actions by the FCA, MLROs have almost without exception cited a lack of resources as being a significant factor in under performance.

And so, on the 3rd October 2018 it gave me immense pleasure and satisfaction to read the following headline in the Wall Street Journal, “The $500 Million Central Bank Heist—and How It Was Foiled’. [2]

The root cause of my happiness was that the report appears to confirm that a $500 million fraud was identified because of the actions of a bright and risk-aware cashier, who reported a personal suspicion within HSBC.

Having had the pleasure of working with HSBC over the past three years, this report gave me enormous gratification, because I know just how hard many, many people have worked diligently since 2012 within HSBC to repair and enhanced the financial crime controls and compliance framework that were sadly lacking prior to this date. (As an aside, it is interesting to note that I have seen little in the way of enthusiastic reporting or headlines supporting and recognising the success of HSBC in identifying and preventing this significant alleged fraud. I guess poor performance sells more print!)

HSBC has invested significantly in training and education in recent years, and this single story of success, serves to demonstrate just how a business that really does commit to a culture of compliance, and the principles of reporting with courageous integrity, can make a difference in the fight against crime.

For me, what the story does reassert is that investment in people, in providing effective and experiential learning, really can make a difference at a time when several commentators are questioning the value and effectiveness of the UK’s suspicious activity reporting system.

I’m not party to how the particular cashier in HSBC was trained and inducted to their role, but I do expect that the training that has been provided has been carefully considered and is role-specific. What is more certain, is that the investment in training by HSBC has contributed to this report being made with the utmost good faith, supported by a culture of compliance, and that this has resulted in the identification and seizure of $500 million of illicit value.

This action was important to the victims of the fraud, in this case the people of Angola, but also strategically to HSBC and the United Kingdom. How important? Well, in the National Crime Agency report on financial crime reporting activity across the UK in October 2017, ‘Suspicious Activity Reports (SARs) Annual Report 2017’, the total amount of assets denied to criminals as a result of Defence Against Money Laundering requests (refused and granted) over the preceding 18-month period was £56,541,579. [3]

In simple terms therefore, the actions of a single, well trained employee of HSBC has resulted in the ‘effectiveness’ of the UK system improving (subject to currency conversions) to the tune of approximately 600%!

So, if you are asked to measure and explain the return on training investment, it may be appropriate to share the details of just what can be achieved from just one report of high value money laundering, and how the business can bask in the rewards of this success, or else, you could share the inflammatory headlines that we are now reading concerning several other regulated banks across Europe, who are now feeling the considerable heat from criminal, legal and regulatory inquiry.

We now appear to have a wonderful case study that has grown and developed between 2012 to 2018, on the value and benefits of training and investment in our people, and that finally gives us a measurable and quantifiable value assessment to support why people really are our most valuable resource and line of defence in the fight against crime, and why approving that budget is so important.

Good luck!

[1] https://www.fca.org.uk/publication/thematic-reviews/tr14-16.pdf

[2] https://www.wsj.com/articles/the-500-million-central-bank-heistand-how-it-was-foiled-1538578897

[3] http://www.nationalcrimeagency.gov.uk/publications/suspicious-activity-reports-sars/826-suspicious-activity-reports-annual-report-2017